Money blogger

A blog about money related topics

Avoid Common Day Trading Mistakes

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Fortunes are made and lost through stock trading. A day trader is particularly susceptible to making and/or losing money on a consistent basis. Avoiding the three most common mistakes made by new day traders can minimize the typical high risk to improve the odds of winning.

Day Trading Is, By Definition, Risky

All day trading definitions are similar. A day trader buys and sells securities throughout the trading day and closes all activities by the end of the daily period. The opposite of a buy and hold strategy, this action plan involves taking wins and losses daily.

Look at the many daily highs, lows, and overall volatility of online stock trading. Clearly, the risk/reward quotient is always high on both sides of the equation. Daily online trading can generate large profit and devastating losses.

A day trading strategy requires that the investor minimize risk and avoid common mistakes. The vagaries of the stock market will generate its own results without negative assistance from the trader. [Read more…] about Avoid Common Day Trading Mistakes

The Business of Trading Financial Markets

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Every financial market trader should ask, “Where do I want to be when I am finished with trading?” This is the same question every business owner should ask. A trading business may be the vehicle used to get to a specific destination, but a vision provides the real purpose — making money in the markets.

The next question ought to be, “What can I do to ensure my trading helps me achieve my goals?” Thinking about a set of actions, one should then articulate what are the goals and objectives.

This article summarizes some basic market trading knowledge and skills needed, and outlines a specific individual plan required to help achieve the desired objectives and success in trading markets.

Trading Market Skills

Trading stocks and equities is a business – buying or selling financial instruments, such as stocks, commodities, currencies, etc., with the intention of making a profit. There is a perception that trading is an easy way to wealth, but the reverse is true. Trading is hard work and requires: [Read more…] about The Business of Trading Financial Markets

How to Create an Investment Portfolio and Build Wealth

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In today’s financial market individual investors can create investment portfolios with little initial investment. Mutual funds companies and brokerage houses have made initial investing very affordable by requiring little cash outlays to open an account. Investment companies have also created many financial products targeted for individual investors who want to build wealth for the long term.

Keep Investment Cost Low

Brokers charge different fees to buy and sell stocks depending on the services offered. The full service brokerage houses may charge larger fees, while many of the discount or online brokers charge lower fees to buy and sell. Keeping investment cost low is important to obtain a better return on a stock position. However, individual investors using discount brokers need to perform a lot of the stock and market research on their own.

Mutual Funds companies offer a diverse pool of funds and each fund has its own expense schedule. These expenses are expressed as a percent of fund balance. It is recommended to stay below 1% for annual fund expenses to keep investing costs lost. [Read more…] about How to Create an Investment Portfolio and Build Wealth

When Expenses are Capitalized as Assets

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Booking something as an asset or an expense is not always black or white. There are many gray areas in accounting. It’s easy to know that a car or a building is an asset, but what about routine repairs to that car or building? When is it an expense, and when should those repairs be added to the cost of that asset (capitalized)?

As discussed with prepaid assets and unearned revenue, such routine repairs would always be considered an expense if it would only affect the current period of time. For instance an oil change would always be an expense, since it affects the car right then to help it run better. It could conceivably increase the useful life of the automobile but not increase its worth.

Improvements are Assets not Expenses

On the other hand if the engine died and had to be replaced, this would probably increase the car’s life as well as its worth. So the engine expense would be capitalized. The best self check is to ask yourself if the expense only affects the current period of time or if it will be an ongoing use for a year or more. Is the cost an improvement or merely a repair or maintenance charge?

Since an oil change has to be done every few months, it is obviously a current period expense. But a new or rebuilt engine would logically be expected to last for several years. So that expense would be added to the cost of the car. [Read more…] about When Expenses are Capitalized as Assets

When Expense becomes Asset and Revenue becomes Liability

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The basic accounting equation explains how assets equal liabilities plus equity. The accounts that make up these assets, liabilities and equity are detailed on the company’s Balance Sheet. Income (or loss) is a part of the Equity section, and this information is detailed on the Income Statement. Revenues and expenses from a specific period of time are on the Income statement.

So what are expenses and revenues? Expenses are costs of doing business during a set period of time, usually a month. These can vary from rent to payroll. Revenues are earned during the same period of time. Depending on if the company is cash or accrual based, these revenues can be real or accrued, meaning that either cash or a receivable respectively is associated with them.

Income Statements Show Profits and Loss

In order for these expenses and revenues to impact only the reporting period, sometimes they must be posted as assets or liabilities. Let’s say that Business A pays their rent every month and receives cash receipts immediately upon service rendered. This company can post their rent and cash received as current expenses and revenues. [Read more…] about When Expense becomes Asset and Revenue becomes Liability

Money Saving Tips for Reducing Household Costs

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A lifestyle based on frugal living and reducing household costs is highly advantageous, especially during the current credit crunch. It could mean that credit card debt can be reduced or even that the money saved can be invested in a tax-free cash ISA or stocks and shares ISA.

Reduce Household Costs by Switching from Sky TV to Freeview

Whilst paying for a TV license is compulsory, a great way to save money is cancelling that additional Sky TV subscription and opting for Freeview. Freeview currently has 48 TV and 24 radio channels available. This simple frugal living idea will reduce household costs by up to £600 per annum.

Cut Living Costs with the Rent-a-Room Scheme

By 2020, the percentage of men living alone over the age of 60 is expected to be about 30%. The government now offers home-owners the chance to deal with this cost of living increase.The rent-a-room scheme permits someone to make a tax-free income of up to £4,250 per annum. [Read more…] about Money Saving Tips for Reducing Household Costs